Big cigarette makers could recoup $2 billion under a proposed deal with state attorneys general to resolve a long-running dispute over payments required by the landmark 1998 tobacco settlement, the Wall Street Journal reported.

Negotiators for Altria Group Inc's Philip Morris USA and other tobacco companies have reached a tentative deal with officials representing the 46 states that signed the 1998 Master Settlement Agreement, the paper reported, citing people familiar with the matter.

If all of the states and U.S. territories in the 1998 agreement sign on, the tobacco companies would receive at least $2 billion, according to a formula described in a memorandum of understanding detailing terms, the business daily said.

The accord would allow big tobacco companies to keep part of the money they have withheld from states or otherwise disputed under the 1998 pact, under which they agreed to pay more than $200 billion to help states recover the costs of treating sick smokers the Journal said.

Representatives of Altria Group, Reynolds American and Lorillard were not available for comment outside business hours.

(Reporting by Tenzin Dekeva and Jochelle Mendonca in Bangalore; Editing by Gary Hill)